Local Housing Allowance rates cover just 18% of cheapest rents
Local Housing Allowance (LHA) rates now cover just 18% of the cheapest private rents, widening the gulf between the support benefits tenants receive and the rent they have to pay.
The Joseph Rowntree Foundation (JRF) analysed Government data to arrive at the figure, which comes just weeks after the Institute for Fiscal Studies said that only 5% of private rental properties listed for rent on Zoopla in the first quarter of this year would be covered by LHA.
LHA rates are used to calculate benefit payments for housing costs. Historically rates were set at the average rental price for an area, with the sum regularly reviewed. However the rate was reduced to the 30th percentile in 2011.
They were frozen between 2016 and 2020 when they were realigned to the 30th percentile once more at the outset of Covid, based on rental prices as of September 19.
They have remained at this level despite real-world rents going up by more than 10%.
In just over two years to August 2022 the number of households facing a shortfall in their housing benefit increased by 50%, representing more than 791,593 private rented households in England and Wales.
In real terms is costing households on average around £750 a year to make up the difference, often money they simply don’t have.
The NRLA has been campaigning on the issue for some time, claiming the Government must reverse the freeze to support both the 38% of private renters in receipt of housing benefit, and the landlords housing them.
NRLA Chief Executive Ben Beadle has recently given evidence to a House of Commons Work and Pensions Committee, which launched an inquiry into the adequacy of working-age benefit levels in the UK earlier this year.
Responding to today’s figure he said: “This reinforces the NRLA’s position, that the current benefits system is not fit for purpose, particularly at a time of housing crisis with an ever-growing gap between supply and demand of homes to rent.
“Unless action is taken now to change LHA rates to reflect real-life rents there is a real risk that some of the most vulnerable tenants may fall into significant arrears or homelessness.
“Keeping Housing Benefit rates pegged to market rents is vital – and the Government needs to carry out an impact assessment on its decision to freeze LHA rates this year as a matter of urgency, before determining rates for 2024 – 2025.”
NRLA campaign
As part of its welfare campaign the NRLA is asking the Government for:
• A reversal of the freeze on LHA rates – which should instead be aligned to at least the 30th percentile – based on today’s rents
• The abolition of the five-week wait for Universal Credit payments
• Payment of the housing element of Universal Credit in advance to better reflect rent payment cycles
• The replacement of the existing advance payment loan with a grant
• Housing benefit paid directly to landlords.
More information
To find out more about the NRLA’s campaigns work on benefits click here.
